Financial Accounting
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Contents
Part 1
Trial Balance of Arctic Supplies
Trading, Profit and Loss Account for Arctic Supplies
Balance Sheet of Arctic Supplies
Accounting Standards
Realisable Value
Stakeholders
Accounting Methods
Types of Business Organisations
Memorandum of Association
Production of Final Accounts
Notes To The Accounts
Part 2
Accounting Ratios
Limitations of Ration Analysis
Bibliography
Part 1
Arctic Supplies is a wholesaling business. As book-keeper for the organisation in the accounts department, I have been asked to prepare a trial balance, Trading, Profit and Loss Account and Balance Sheet for year ending 31st December 2006.
Trial Balance
Trial Balance of Arctic Supplies as at 31st December 2006
Debit
Credit
Stock
70,000
Purchases
280,000
Sales
420,000
Returns Inwards
6,000
Returns Outwards
4,500
Discounts Received
750
Discounts Allowed
500
Heating & Lighting
13,750
Salaries
35,600
Post & Packaging
1,400
Premises
120,000
Debtors
55,000
Creditors
47,000
5,000
Capital
195,000
Drawings
35,000
Fixtures & Fittings
45,000
667,250
667,250
Trading, Profit & Loss Account of Arctic Supplies
Trading & Profit & Loss Account for Arctic Supplies
At End of 31st December 2006
Sales
420,000
– Returns Inwards
6,000
414,000
Opening Stock
70,000
Purchases
280,000
– Returns Outwards
4,500
Closing Stock
60,000
Cost of Goods Sold
285,500
Gross Profit c/d
128,500
414,000
414,000
Gross Profit b/d
128,500
Discounts Received
129,250
Less Expenses
Discounts Allowed
Salaries
35,200
Heating & Lighting
14,100
Post & Packaging
1,400
51,200
Net Profit
78,050
129,250
129,250
Balance Sheet of Arctic Supplies
Balance Sheet of Arctic Supplies
As of 31st December 2006
Fixed Assets
Premises
120,000
120,000
Fixtures & Fittings
45,000
45,000
165,000
165,000
Current Assets
Stock
60,000
Debtors
55,000
5,000
Salaries Pre-paid
120,400
120,400
Less Current Liabilities
Creditors
47,000
Heating & Lighting Accruals
47,350
47,350
Working Capital
73,050
Net Assets
238,050
Financed By
Capital
195,000
Net Profit
78,050
– Drawings
35,000
238,050
Accounting Standards and Conventions
Financial Statements are a companys reports of its financial transactions over various periods of time; monthly, quarterly and annually. Separate financial statements have to be prepared because each one provides different information that when combined can provide information about the financial position, performance and changes